On August 2, the US Department of Commerce announced that Vietnam will continue to be classified as a non-market economy. The decision was announced after the US postponed it due to Vietnam’s national mourning for General Secretary Nguyen Phu Trong.
The U.S. Department of Commerce said that maintaining the classification means that the method for calculating antidumping duties on imports from Vietnam will not change. The Commerce Department initially planned to announce the decision on July 26, but postponed it by a week due to technical issues. Also on July 26, Vietnam held a state funeral for General Secretary Nguyen Phu Trong, who, along with President Joe Biden, upgraded the Vietnam-U.S. relationship to a comprehensive strategic partnership last September.
Vietnam has been hoping to be removed from the US list of 12 non-market economies due to its extensive state intervention in the economy. Many Vietnamese leaders have called on the US to do this in order to improve bilateral relations.
Vietnam’s Ministry of Industry and Trade expressed regret over the US decision, saying it would disadvantage Vietnamese exporters to the US market. They would continue to be discriminated against in anti-dumping and anti-subsidy investigations. The actual production costs of Vietnamese enterprises would not be recognized, but a third country’s “substitution value” would be used to calculate the dumping margin.
Several US lawmakers have sent a letter to Commerce Secretary Gina Raimondo asking her not to grant market access status to Vietnam, citing the country’s continued operation as a planned economy governed by Communist Party resolutions. US senators and congressmen have also expressed concerns about labor rights and Vietnam’s connection to China for raw materials.
The Vietnamese Ministry of Industry and Trade affirmed that if the US Department of Commerce considered objectively and fairly, they would see that Vietnam is already a market economy, as 71 other countries have recognized, including the UK, Canada, Australia and Japan.
A spokesman for the US Commerce Department said it would consider objections and concerns from lawmakers and steel producers in the US when making a decision.
Immediately after the decision was announced, Mr. Kevin Dempsey, president of the American Iron and Steel Institute (AISI), welcomed this conclusion, saying that granting market economy status to Vietnam was inappropriate, given the important role of state-owned enterprises in Vietnam’s economy and Vietnam’s currency manipulation and other trade restrictions.
On the contrary, US retailers support upgrading Vietnam to a market economy status. Mr. Ted Osius, head of the US-ASEAN Business Council, said that Vietnam already has a market economy.
Lawyer Vu Duc Khanh from Canada expressed support for the decision of the US Department of Commerce, saying that recognizing Vietnam as a market economy at this time is unrealistic and detrimental to US national security.
Vietnam’s Ministry of Industry and Trade said it will study and analyze the arguments in the report of the US Department of Commerce to supplement and complete the dossier requesting a review of Vietnam’s market economy status.
The United States is currently Vietnam’s largest export market, with two-way trade worth more than $120 billion last year. Although the US has not upgraded Vietnam to a market economy, as the US seeks to move its supply chains away from China, Vietnam has become one of the countries the US has chosen to cooperate with to reduce its dependence on Beijing.
Lawyer Khanh said he supports making Vietnam a “friendly, active and trustworthy partner in the Indo-Pacific economic framework” if Vietnam is “determined to adjust its legal, political and economic systems towards a complete market economy.”